BILL ANALYSIS

C.S.H.B. 1547

By: Cook

Juvenile Justice & Family Issues

Committee Report (Substituted)

BACKGROUND AND PURPOSE

State law regarding reimbursement and economic contribution with respect to marital property rights can be very confusing to those not well versed in the history of such law, as it is often misinterpreted and misunderstood by litigants, practitioners, and courts, leading to an unnecessary waste of public and private resources. C.S.H.B. 1547 seeks to aid litigants, practitioners, and courts alike by clarifying a number of issues regarding such claims for reimbursement, including what constitutes a reimbursement claim and offset and the elements that must be proved to recover a claim or offset.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

C.S.H.B. 1547 amends the Family Code to revise provisions establishing the basis for certain claims of reimbursement between marital estates and the applicable offsets used in determining those claims and to provide that a claim for reimbursement relating to marital property rights and liabilities exists when one or both spouses use property of one marital estate to confer on the property of another marital estate a benefit which, if not repaid, would result in unjust enrichment to the benefited estate. The bill removes, revises, and repurposes certain factors that constitute a claim for reimbursement and apply to certain offsets and sets out additional related provisions as follows:

· to require a spouse seeking reimbursement to a marital estate to prove the following:

o that the spouse or both spouses used property of the marital estate to confer a benefit on the property of another marital estate;

o the value of that benefit; and

o that unjust enrichment of the benefited estate will occur if the benefited estate is not required to reimburse the conferring estate;

· to establish that property of a marital estate confers a benefit on another marital estate's property if:

o one or both spouses used property of the conferring estate to pay a debt, liability, or expense that in equity and good conscience should have been paid from the benefited estate's property;

o one or both spouses used property of the conferring estate to make improvements on the benefited estate's real property, and the improvements resulted in an enhancement in the value of the benefited estate's real property; or

o one or both spouses used time, toil, talent, or effort to enhance the value of property of a spouse's separate estate beyond that which was reasonably necessary to manage and preserve the spouse's separate property, and for which the community marital estate did not receive adequate compensation;

· to establish that the value of the benefit conferred by the property of one marital estate on the property of another marital estate is determined as of the date of the trial's commencement and to provide the following:

o if the benefit resulted from the use of the conferring estate's property to pay a debt, liability, or expense that in equity and good conscience should have been paid from the benefited estate's property, then the value of the benefit conferred is measured by the amount of the debt, liability, or expense paid by the conferring estate;

o if the benefit resulted from the use of the conferring estate's property to make improvements on the benefited estate's real property, then the value of the benefit conferred is measured by the enhancement in the value of the benefited estate's real property that resulted from the improvements; or

o if the benefit resulted from the use of time, toil, talent, or effort to enhance the value of property of a spouse's separate estate, then the value of the benefit conferred is measured by the value of the time, toil, talent, or effort beyond that which was reasonably necessary to manage and preserve the spouse's separate property;

· to establish that the determination of whether unjust enrichment will occur if one marital estate is not required to reimburse another marital estate is a question for the court to decide; and

· to authorize a claim for reimbursement of a marital estate by one spouse to be offset by the value of any related benefit that the other spouse proves that the conferring estate received from the benefited estate, including the following:

o the value of the use and enjoyment of the property by the conferring estate, except that the separate marital estate of a spouse may not claim an offset for use and enjoyment of a primary or secondary residence owned wholly or partly by the separate marital estate against contributions made by the community marital estate to the separate marital estate;

o income received by the conferring estate from the property of the benefited estate; or

o any reduction in the amount of any income tax obligation of the conferring estate by virtue of the conferring estate claiming tax-deductible items relating to the property of the benefited estate, such as depreciation, interest, taxes, maintenance, or other deductible payments.

C.S.H.B. 1547 defines "benefited estate" as a marital estate that receives a benefit from another marital estate and defines "conferring estate" as a marital estate that confers a benefit on another marital estate.

C.S.H.B. 1547 establishes that the remedies provided by statutory provisions regarding claims for reimbursement relating to marital property rights and liabilities are not exclusive and are in addition to any other remedy provided by law.

C.S.H.B. 1547 applies to a claim for reimbursement that is pending in a trial court on the bill's effective date or that is filed on or after that date.

EFFECTIVE DATE

September 1, 2023.

COMPARISON OF INTRODUCED AND SUBSTITUTE

While C.S.H.B. 1547 may differ from the introduced in minor or nonsubstantive ways, the following summarizes the substantial differences between the introduced and committee substitute versions of the bill.

The substitute includes a condition absent from the introduced that the property of a marital estate confers a benefit on another marital estate's property if one or both spouses used time, toil, talent, or effort to enhance the value of property of a spouse's separate estate beyond that which was reasonably necessary to manage and preserve the spouse's separate property if the community marital estate did not receive adequate compensation for that property.

The substitute omits a specification from the introduced that the court's determination of whether unjust enrichment will occur if one marital estate is not required to reimburse another marital state is a question for the court to decide when making its just and right division of the spouses' community marital estate.